LTG share price rose nearly five per cent after posting double-digit revenue growth

Oliver Gill
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LTG grew its e-learning footprint outside of the UK in 2016 (Source: Getty)

Shares in Learning Technologies Group (LTG) rose five per cent this morning after the firm announced annual earnings that had been swelled by acquisitions made in 2016.

The firm said it was enjoying considerable "structural tailwinds" and its proportion of recurring earnings had increased four times since 2015.

The figures

Revenue increased by 42 per cent to £28.3m from £19.9m, of which recurring revenues represented 27 per cent up 170 per cent.

The firm generated more revenue from outside of the UK, with overseas sales 36 per cent of the total as compared with 12 per cent one year prior.

Adjusted earnings increased by 77 per cent to £7.7m.

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LTG generated a statutory loss before tax of £1.2m after accounting for acquisition related deferred consideration as deemed remuneration

Dividends were hiked by 40 per cent to 0.21p per share.

Why it's interesting

Launched on the Aim three and a half years ago the LTG is growing at a rate of knots through acquisition.

The Aim-quoted firm reckons the e-learning market is fragmented and there are substantial benefits from bringing consolidating businesses.

Last year, LTG bought fellow Aim firm NetDimensions for £53.6m, the majority the deal was funded by a share issue. Paul Richards, an analyst at Numis said: "The acquisition is strategically compelling as it completes the range of capabilities required by LTG to offer a full service e-learning offering, broadens its geographic reach, deepens its expertise in highly regulated sectors and extends its partner base."

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The proportion of revenues generated from recurring sources gives comfort to investors. And LTG chief executive Jonathan Satchell told City A.M. once NetDimensions revenues were fully incorporated into the group, this will jump to around 50 per cent. A sizable change from 12 per cent one year ago.

What the company said

Satchell on:

Acquisitive growth... "We enjoy good structural tailwinds and we are picking up best in breed businesses to assimilate into the group... We've caught our timing quite fortuitously, more by luck than by design.

Underlying revenue growth... "Underlying organic growth is high single-digits. We're very pleased with the earnings growth.

Recurring revenues... "We knew that if we were going to create a balanced business we needed to acquire some recurring revenues.

Plans to move to a main London-listing... "There is no plan in that regard. We've seen as having good corporate governance so there is no need to jump off the junior market."

Chairman Andrew Brode added:

LTG has substantially diversified its geographical reach in the past year and has developed a broad client base both across corporate and government sectors.

The board is excited by the opportunities already identified that the acquisition of NetDimensions offers the group. The board is therefore confident in the group’s prospects and expects to report enhanced progress during 2017.

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